US to join suit against Tennessee health system alleging $800M in fraud

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The U.S. government filed a motion to intervene Oct. 8 in a whistleblower false claims lawsuit filed against Methodist Le Bonheur Healthcare in Memphis, Tenn.

The original whistleblower lawsuit, filed in 2017 and unsealed in 2019, alleges Methodist Le Bonheur Healthcare paid kickbacks that allowed The West Clinic's outpatient treatment centers to become part of Methodist Le Bonheur and allowed West Clinic to manage inpatient and outpatient adult care at Methodist Le Bonheur. The plaintiffs claim that one purpose of the payments was to induce referrals from oncologists and other medical specialists at Memphis-based West Clinic to Methodist Le Bonheur.

The lawsuit claims physicians at West Clinic were given kickbacks for referrals of cancer patients for hospital admissions, chemical infusions, radiation and certain outpatient procedures.

The lawsuit claims the scheme took place from 2012 to 2018 and that Methodist Le Bonheur paid more than $400 million in kickbacks to West Clinic. Additionally, the lawsuit claims the scheme resulted in $800 million in fraudulent claims being submitted to Medicare. 

In the motion to intervene, the U.S. states it is seeking to recover damages on claims that Methodist Le Bonheur knowingly paid kickbacks and submitted false claims to federal healthcare programs, including Medicare and Medicaid.

The plaintiffs in the case, two former Methodist executives, said they strongly support intervention by the U.S. The executives were the former CEO of Methodist University Hospital and the former dean of the School of Medicine at University of Tennessee Health Science.

Methodist Le Bonheur said it intends to oppose the intervention.

"We are disappointed by the Department of Justice's decision to seek to intervene in this qui tam lawsuit; nothing has changed about the case since DOJ’s initial decision not to intervene in September 2019," Methodist Le Bonheur said in a statement obtained by Becker's. "The lawsuit seeks to portray customary and legal business arrangements between MLH and West Clinic physicians as illegal activities. The allegations in the suit are without merit and we will vigorously defend against them."

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